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Rick Hansen is a hero to a generation of people with spinal cord injury, but extravagant spending on anniversary event raises concerns

Rick Hansen’s employment agreement allows him to take a year-long, fully paid sabbatical every seven years.

Photograph by: Ward Perrin
, Vancouver Sun

On the evening of May 22, 2012, a star-studded cast gathered at the Pacific Coliseum for the grand finale of the 25th anniversary of Rick Hansen’s Man in Motion World Tour.

The performers included David Foster, Sarah McLachlan, Jann Arden, the Canadian Tenors, and pop band Marianas Trench. At the end of the program, Hansen wheeled onto the stage to deliver the benediction:

“This night would not have been possible without a dream, and of course, the courage to try, and a country that believes in me. Once again, I find that the end is just the beginning and I look forward to the journey we will all take in the next 25 years.”

It was an inspirational speech from a person who has provided hope and inspiration to a generation of people with spinal cord injuries.

But it was also an expensive message. According to internal documents obtained by The Vancouver Sun, the homecoming event cost $1.95 million to stage, but generated only $274,572 in revenues, for a total loss of $1.67 million.

And that was just the tip of the iceberg.

The homecoming was the conclusion of a marathon anniversary celebration organized and funded by the Rick Hansen Foundation, the charity that Hansen founded after his original world tour.

The purpose of the celebration was to raise awareness of spinal cord injury-related issues, and to raise money for research.

The anniversary celebrations had begun on March 21, 2010, exactly 25 years after Hansen embarked on his original around-the-world tour, and ended 26 months later on May 22, 2012, exactly 25 years after he completed his original tour.

The main event was a cross-Canada relay that retraced Hansen’s original route. Instead of a torch, participants passed a specially made Rick Hansen medal from one to the other.

It was a complex and costly undertaking. The final bill was $10.94 million.

Hansen and his entourage also embarked on an “international outreach” program, which involved trips to Jordan, Israel, Australia, China and the United States to further international collaboration on spinal cord research and care. Total cost was $1.27 million.

The foundation also staged an international conference in Vancouver to share best practices for spinal cord research and care. The conference cost $1.44 million, but total revenues were only $200,600, for a net loss of $1.24 million.

All told, the foundation spent an estimated $17 million to $19 million on the anniversary celebrations, based on internal records and confirmed by people close to the foundation.

The foundation insists this was a calculated investment: “It was a planned, strategic investment to capitalize on this one-time opportunity,” it said in a statement to The Sun.

On the revenue side, however, the foundation made a large miscalculation.

It had aimed to raise $250 million in donations and future commitments during the anniversary period. This was an extremely ambitious goal. In the preceding 23 years, the foundation had raised a total of $250 million. Now it hoped to match that figure in a 26-month period.

More than 37 months have passed since the anniversary kickoff, but so far, the foundation has secured donations and future commitments for only $84 million, just one-third of its targeted amount. Most will be spread over five years and a significant portion is simply a renewal of existing funding.

Even with special government funding and myriad corporate donations and sponsorships, the impact on the foundation’s bottom line has been severe.

During the year ending March 31, 2012, the foundation reported an $8.1-million deficit. And according to internal documents, it lost another $3.3 million during the following two months.

Now that the anniversary is over, the foundation has been winding back expenses. Whether these cuts — combined with future donations — will be sufficient to reverse those losses remains to be seen.

That raises the question: Was it worth it? Given that the anniversary celebrations were also intended to raise awareness, there is no clear answer.

The purpose of this story is not to undermine the exceptional service that Hansen and his foundation have provided to disabled people. It is to review the stewardship of the millions of dollars that public and private donors have contributed to the foundation.

Neither Hansen nor anyone else at the foundation agreed to be interviewed for this story.

Written questions were met with limited responses and in some cases, no answer at all.

•

Hansen, now 55, was born in Port Alberni and grew up in Williams Lake. When he was just 15 years old, he was riding in the back of a pickup truck that was involved in an accident. He became paralyzed from the waist down.

Undaunted, he became an accomplished wheelchair athlete, winning 19 international wheelchair marathons, including three world championships.

In March 1985, Hansen embarked on a world tour to promote spinal cord research and raise awareness for people with disabilities. He traversed 34 countries and logged more than 44,000 kilometres. By the time he rolled into BC Place Stadium in May 1987, he had raised $26 million for the cause and was hailed as an international hero.

To manage the money raised on his world tour and continue his dream of finding a cure for the effects of spinal cord injury, Hansen formed The Man in Motion World Tour Society, which later became the Rick Hansen Foundation.

It operates as a registered charity with an 11-person board of directors co-chaired by Hansen and Vancouver lawyer Lyall Knott.

The foundation has two functions. The main one is to raise money for the Rick Hansen Institute, which is a separate organization engaged in spinal cord injury research. (Hansen is neither an officer nor a director of the institute.)

During the three years ending March 31, 2012, the foundation’s gross revenues have ranged from $22.4 million to $27.2 million. About three-quarters came from provincial and federal government sources, and most of this money flowed through to the institute.

The foundation’s second function is to run programs, most notably:

• Initiatives to improve the quality of life for people with disabilities (such as wheelchair ramps and home modifications).

• Programs to increase participation in wheelchair and adaptive sports.

• School programs that use the Rick Hansen story to build awareness and social responsibility.

In addition to these programs, Hansen has personally provided inspiration for a generation of disabled people, from the time of injury through rehabilitation and reintegration into society.

As a result of his remarkable accomplishments, he has received many prestigious awards and accolades. Most notably, he was named a Companion of the Order of Canada and a member of the Order of British Columbia.

He has also received honorary doctorates from numerous universities, including UBC, the University of Toronto and McGill University. Three public schools have been named after him (in Abbotsford, and Mississauga and London, Ont.). In 2010, he was given the honour of carrying the Olympic flame into BC Place for the opening ceremony.

•

Until last October, the foundation did not publicly release full audited statements, nor was it legally required to do so.

Instead it released summary statements that — according to auditor PricewaterhouseCoopers — “do not provide all the disclosures required by Canadian generally accepted accounting principles” and are “not a substitute for reading the audited financial statements.”

In October, The Sun asked for full audited statements, but the foundation refused on grounds that it was already providing adequate information.

The Sun pressed the matter, stressing that taxpayers were largely funding the foundation, directly through federal and provincial government contributions and indirectly through charitable donation tax credits. Several days later, the foundation reconsidered and released its full audited statements.

One of the advantages of audited financial statements is that they include notes that provide all sorts of important additional information, most notably related-party transactions.

As previously reported, the notes revealed that in 2009, Hansen donated rights to his name for $1.8 million. In return, he received a $1.8-million tax receipt.

In B.C., tax receipts for charitable donations can be used to claim tax credits equal to 43.7 per cent of the donation amount.

Those tax credits can then be used to reduce taxes that would otherwise be payable for the next five years. On this basis, the $1.8-million tax receipt could potentially have saved Hansen $786,600, courtesy of Canadian taxpayers.

“I am not aware of any other instances in which a Canadian charity has issued an official donation receipt for the ‘donation’ or licensing of the living person’s name,” Toronto lawyer Mark Blumberg, an expert in charity law, told The Sun.

A note to the audited statements revealed that CRA was challenging the transaction. In an Oct. 12, 2012 letter to the foundation, the agency said it had concluded that the donation “does not meet the definition of a gift,” but was willing to hear further submissions on the matter.

The foundation declined to say where the matter currently stands. If the receipt is disallowed, Hansen could be reassessed for any tax credits he claimed under the donation. The foundation will not have lost anything, other than the legal and appraisal costs associated with the transaction.

Another note to the audited statements revealed that CRA was also challenging a $10-million tax receipt that the foundation issued in 2006 to geologist Stewart Blusson for a donation of private company shares.

Blusson co-discovered the Ekati diamond mine in the Northwest Territories in the early 1990s. He still owns 10 per cent of the mine and continues to receive royalties from it.

According to the note, Blusson’s donation was made in the form of shares of a private company that is controlled by Blusson and “holds the rights to a percentage of natural resource revenues in Canada” (referring to royalties from the Ekati mine).

Since shares of private companies are not readily salable, Blusson and the foundation entered into an agreement that would see Blusson buy back the shares for $10 million over a 10-year period at predetermined prices. In May 2010, Blusson repurchased the remaining shares, thereby concluding the deal.

CRA reviewed the foundation’s issuance of a tax receipt for that donation, which potentially reduced Blusson’s tax bill by $4.37 million, and gave it a preliminary thumbs-down.

“The foundation has been informed that the Canada Revenue Agency has challenged the tax receipt that was issued to the donor,” the foundation reported in its latest financial statements, which were signed off by the auditor in June 2012.

The foundation said that, if the receipt is disallowed, Blusson is not likely to ask for his money back. It is not clear where the matter currently stands. The foundation declined to discuss the matter and Blusson did not return phone calls.

•

How much does Hansen make? The financial statements do not break out that figure, and the foundation refuses to say.

CRA requires charities to report how many employees it has in particular salary ranges. The highest range is “$350,000 and over.”

In previous financial returns, the foundation reported that it paid one person more than $350,000 every year from at least 2009 to 2011. That person is not identified in the returns, but The Sun has determined it is Hansen.

How much over $350,000 is he making? The Sun has determined he earns more than $400,000 per year. How much more is not clear.

“The board is very confident that Rick Hansen’s compensation is comparable and competitive with individuals leading organizations of similar size and complexity, and carrying similar workloads,” the foundation told The Sun.

However, Hansen’s compensation appears to be at least $50,000 more than the next highest charity executive in B.C. The closest was the Canadian Cancer Society, B.C. & Yukon Division, which paid somewhere between $300,000 to $350,000 to its top executive. The society has larger revenues and program expenditures than the foundation, however it was not built on the stellar accomplishments of one man. All other B.C. charities paid their top executives less than $300,000.

•

Until July 2011, Hansen served as president and chief executive officer of the foundation. Then he resigned his officers’ positions and became co-chairman with Lyall Knot. Art Reitmayer, a chartered accountant and former broadcast executive, replaced Hansen as the foundation’s chief executive.

At the same time, the foundation formed a not-for-profit society called the Rick Hansen Leadership Group (RHLG). The group is technically controlled by the foundation but headed by Hansen and includes three assistants. It provides “leadership services” to the foundation on a contract basis.

This restructuring enabled Hansen, who is involved in other activities (mainly related to fish conservation), to pursue those activities without running afoul of the objects of the foundation.

It also removed Hansen from the foundation’s direct payroll. Instead of paying him directly, the foundation now pays him indirectly through the leadership group.

That means the foundation no longer has to report any compensation level for him in its CRA returns.

Instead, his salary is incorporated into the annual stipend that the foundation pays his leadership group. That stipend is negotiated annually.

How much the foundation pays the leadership group was not revealed until the foundation, at The Sun’s urging, released the full audited statements.

Those statements show that, during the year ending March 31, 2012, the foundation paid the leadership group $770,560, but that would have covered only about three-quarters of the year (from the group’s creation in July 2011 to the year ending March 2012).

The statements provide no breakdown of how that money was spent, or how much accrues to Hansen personally.

Exactly what the leadership group does, or will do, is not clear. The foundation refers to the group as a “separate and distinct social enterprise” that “supports Rick’s extended leadership.”

“Through the years, Rick has personally extended his leadership and energy into additional programs, initiatives and innovations that align with his vision of a healthier and more inclusive world,” the foundation says on its website.

The foundation says it has “recently applied to extend its charitable purpose in order to support future environmental initiatives that contribute to a healthy environment.”

Hansen’s vision of a healthier and more inclusive world now appears to include fish conservation, which has been his lifelong passion.

The foundation’s website refers to the Pacific Salmon Foundation and the Fraser River Sturgeon Conservation Society, which Hansen has actively supported over the years. But it does not explain how fish conservation fits with spinal cord injury and related issues, or what resources Hansen and his foundation are going to direct to this initiative.

Reitmayer resigned as chief executive officer in July 2012, after only 13 months on the job. He declined to comment for this story. A new chief executive has not yet been named.

•

In the audited financial statements for the year ending March 31, 2012, a figure of $1.14 million is recorded as owing to the Rick Hansen Leadership Group.

The Sun has learned that nearly all this accrued liability is on account of a clause in Hansen’s employment agreement that permits him to take a year-long fully paid sabbatical every seven years.

As at year-end, he hadn’t taken any of those sabbaticals, so the benefit was accrued as money owing to the leadership group. This is a substantial benefit that the foundation has never publicly disclosed.

Hansen is currently taking his first-ever sabbatical, but he is not sitting idle. He is registered as a speaker-for-hire with the National Speakers Bureau, which is based in Vancouver. The founder, president and owner of the bureau is Perry Goldsmith, who also serves as a director of the Rick Hansen Foundation.

In an interview, Goldsmith confirmed that he had booked Hansen as a keynote speaker at the Calgary City Teachers’ Convention Association on Feb. 14 and the International YMCA Conference in Vancouver on April 11.

Asked whether he had booked Hansen for any other speaking engagements, he replied: “There are a few others. I can’t tell you the number, that’s competitive information.”

The Sun has since learned that Hansen is also booked as a keynote speaker at the Kiwanis International Convention in Vancouver on June 27. Goldsmith declined to say whether he was involved in arranging this engagement.

How much do these organizations pay? Goldsmith refused to say. However, Adriana Wild, program co-ordinator for the Calgary teachers’ convention, said her organization paid him $20,000 plus expenses (including airfare and hotel accommodation), and Kelly Walker, communications manager for the YMCA of Great Vancouver, said her organization paid $20,000 for Hansen’s April presentation.

Where does the money go? Goldsmith said he remits the speaking fee (less his agency fee, which he declined to quantify) to the Rick Hansen Leadership Group, which uses it “for the cause.”

The Sun asked the foundation what this money is used for, but it declined to comment.

•

As the 25th anniversary of Hansen’s world tour approached, the foundation said it saw “an opportunity to celebrate our accomplishments, re-engage the broader public and broaden our vision.”

“In celebration of our 25th anniversary, we have set a campaign goal of over $250 million (in donations and future commitments) with a timeline of March 21, 2010 to May 22, 2012,” the foundation stated in a February 2010 primer for directors and staff.

The primer noted that charities spend, on average, 12 to 15 per cent of their dollar goals on fundraising, and based on the foundation’s goal, that would translate into a campaign budget of $30 million to $37.5 million.

It acknowledged that $250 million was “a very aggressive goal” and promised it wouldn’t spend “anything like” $30 million to $30.7 million.

“We are tracking all costs against the campaign and will be posting both costs and funds raised annually on our website page,” the note stated.

In fact, the foundation did no such thing. It published what it routinely published: a summary of overall revenues and expenses. No member of the public could possibly discern how much was being raised or spent on the campaign. The Sun, however, obtained a copy of an internal “draft financial summary” for the 26-month period ending May 31, 2012. It states that total revenues received on account of the anniversary were just over $23 million, consisting of:

• $14.1 million in government grants.

• $3.3 million in cash donations from corporate sponsors.

• $1.8 million in non-cash donations from corporate sponsors.

• $3.7 million in private contributions.

• $270,475 from anniversary events.

Of this amount, about $17 million to $19 million was spent on anniversary events, most notably the cross-Canada relay, the international outreach program, the conference on spinal cord injury issues, and the homecoming gala.

Another anniversary initiative was Planat, an online ratings tool that enables people to rate the accessibility of buildings and public spaces. According to the draft financial summary, it cost $1.11 million and was not designed to generate any revenue. Unlike many of the anniversary events, it has enduring value and is apparently being well received.

•

Contrary to expectations, there was no appreciable boost in donations during the 26-month campaign.

During the year ending March 31, 2010 — the year before the tour was launched — total revenues were $24.9 million. During the next two years — when the anniversary celebrations were in full swing — revenues remained relatively flat at $22.4 million and $27.2 million, respectively.

Expenses, meanwhile, soared. During the year ending March 31, 2012, when the cross-Canada relay was in progress, overall expenses jumped by 51 per cent to $35.1 million.

Many categories of spending ballooned: travel and meeting expenses quadrupled to $3.3 million; salaries and benefits jumped 84 per cent to $9.6 million; and consulting and contract services climbed 78 per cent to $3.2 million.

The bottom line is that the foundation lost $8.1 million during the year ending March 31, 2012.

The foundation says its board “pre-approved” a loss of $9.9 million for that year, which means the actual loss was less than budgeted. But it declined to say whether this was the original projection or whether it had to revise its projection in the face of lower-than-expected revenues and/or higher-than-expected expenses.

According to an internal draft accounting obtained by The Sun, the foundation lost another $3.3 million during the two months ending May 31, 2012.

Audited statements for the year ending March 31, 2013 are not yet available. The foundation refused to say whether it is budgeting for another loss, and if so, how much.

In its CRA return, the foundation reported that, during the year ending March 31, 2012, it spent $6.9 million on administration and fundraising, representing 19 per cent of total expenses.

However, this does not include the cost of several key anniversary events. During that year, the foundation spent $7.6 million on the relay, but that expenditure is not included as a fundraising cost. If it is included, the ratios jump to 41 per cent.

Should it be included? Foundation officials repeatedly referred to the anniversary program as a fundraising campaign. However, from a CRA reporting point of view, this characterization presented a dilemma. If the purpose were to raise funds, then at least some of the anniversary costs would have to be reported to CRA as fundraising costs, which would inflate its fundraising costs as a percentage of revenues or expenses.

So the foundation treated the relay as program cost and prohibited fundraising along the relay route (although unsolicited donations could be accepted). Some foundation staff viewed this as a lost opportunity, but it enabled the foundation to minimize its fundraising ratios.

•

As the celebration moved forward, the financial goal remained approximately the same, but the timeline was gradually extended. By the homecoming gala, the 26-month campaign had turned into a five-year campaign.

“The 25th-anniversary campaign has served as a launch of a five-year fundraising campaign with a target of approximately $260 million,” John Gibson, the foundation’s communications manager at the time, told The Sun on May 15, 2012.

The foundation now says it is in the third year of a seven-year fundraising campaign.

“To date we have already raised $84 million, which would not have been possible without the investment in the 25th anniversary,” the foundation says on its website.

However, it is not clear that all these contributions were triggered by the anniversary celebrations, as opposed to normal-course funding.

According to the draft financial summary, the $84 million includes $23.3 million in government grants and corporate contributions and sponsorships that were received and spent during the anniversary campaign. It also includes:

• $10 million in provincial government funding for the B.C. Neurotrauma Fund, announced in March 2010 and to be spread over five years. This is not new funding, rather it is a continuation of the B.C. Neurotrauma Fund Contribution Act, which started in 1998 and mandates a government contribution of $2 million every year.

• $11 million in provincial government funding to the Rick Hansen Institute, also announced in March 2010 and to be spread over seven years. Rather than an increase in funding, it appears to represent a decrease. During the previous eight years, the B.C. government contributed $62 million to spinal cord-related research and $12.9 million to help establish the Blusson Spinal Cord Centre (an arm of the institute).

• $4.5 million from the federal ministry of Western Economic Diversification, received during the year ending March 31, 2013. This was the last tranche of a $13.5-million, three-year funding agreement. This represents an increase in funding: during the previous eight years, WED contributed a total of $15 million, or only about $1.8 million per year.

• Another $35 million in WED funding, announced earlier this month and to be spread over five years. WED characterized this as “renewal funding.”

• $500,000 described as “Alberta government repurposing.” The wording suggests these funds have already been contributed, but are being “repurposed” on account of the anniversary celebrations.

Based on these findings, the foundation’s claim that its anniversary campaign triggered $84 million in contributions that wouldn’t otherwise have been realized appears to be an overstatement.

It is interesting to note that the entire $84 million has been pledged by government bodies. That raises the question: was it necessary to stage such an elaborate public anniversary campaign if the main source of funding was government?

But there were other goals aside from raising money, most notably increasing public awareness of disability issues and establishing partnerships with spinal cord injury research centres in other countries.

In that respect, the foundation said the 25th anniversary provided “an unprecedented opportunity to re-connect with the Canadian public and introduce and engage a new generation in our mission and objectives.”

However, now that the anniversary celebrations are over, it’s clear that the cost-benefit analysis that underpinned this “strategic investment” was seriously flawed, if not by understating projected costs, then at least by overstating projected revenues. The longer-term implications for the foundation remain to be seen.

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